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Final answer:
Contractionary monetary policy involves reducing the money supply to raise interest rates and decrease borrowing, resulting in a lower price level and decreased real GDP.
Explanation:
Contractionary monetary policy refers to a set of actions undertaken by the central bank to decrease the money supply in the economy. This policy aims to raise interest rates, discourage borrowing for investment and consumption, and shift aggregate demand left. As a result, it leads to a lower price level and lower real GDP.
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